Verizon Communications (VZ) jumped 4% on Monday after the telecom giant delivered strong Q2 results and raised its full-year earnings forecast. The upbeat report helped lift the S&P 500 index (SPX), which rose 0.1% to close above 6,300 for the first time. The company’s strong results and improved guidance came as a surprise to many investors who had braced for weaker results due to ongoing challenges in the wireless market.
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The better-than-expected performance quickly drew praise from Wall Street, with several top analysts reaffirming their bullish ratings on the stock. Additional analyst updates may follow soon as the market continues to digest the results.
Here’s a quick look at the Q2 results and what analysts are saying about Verizon’s outlook.
Q2 Results Snapshot
Verizon reported a strong second quarter, beating Wall Street expectations on both revenue and earnings. Revenue climbed 5.2% year-over-year to $34.5 billion, ahead of Wall Street’s estimate of $33.7 billion. The company’s core Wireless service segment brought in $20.9 billion, up 2.2% from the same period last year. Meanwhile, net income climbed nearly 9% to reach $5.1 billion. Adjusted earnings came in at $1.22 per share, above the $1.20 consensus estimate.
For the full year, Verizon raised its EPS guidance to a range of 1% to 3%, up from the previous forecast of 0% to 3%. The company also increased its full-year free cash flow (FCF) outlook to $19.5–$20.5 billion, up from its previous estimate of $17.5–$18.5 billion.
Analysts’ Opinions Post Q2 Results
Following the company’s strong quarterly results, Top analyst James Schneider of Goldman Sachs reiterated a Buy rating on Verizon stock with a price target of $52.
Schneider pointed out that Verizon reported solid financial results, with both EBITDA and free cash flow coming in strong. The analyst also saw the improved guidance as a welcome surprise. He believes that Verizon is managing profitability well, even as the broader wireless market remains competitive. Based on Q2 performance, Schneider expects the stock to perform well in the near term.
Similarly, 5-star analyst Michael Rollins of Citi also reaffirmed a Buy rating on Verizon and maintained his $48 price target. He remained impressed with the company’s Q2 performance, including consistent growth in service revenue. Since many investors had low expectations before the earnings release, he thinks the stronger-than-expected results could help the stock climb in the near term.
Is Verizon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on VZ stock based on eight Buys and eight Holds assigned in the past three months. At $48.20, the average Verizon stock price target implies a 13.44% upside potential.
